When bulls croak

They listed their fashionable, almost-new condo in one of Toronto’s hottest hoods ten days ago. Priced forty thousand less than the last sale in the building, and it’s on a higher floor with an extra parking spot. It should have sold in a weekend. But, crickets.

“Three showings,” says Sharon. “No action.” She slumped in her chair. How could this be happening?

Easy. There are current more than 6,000 condos on MLS in the godless GTA today. A thousand or so more on Craigslist and Kijiji, and the men’s room wall in the Bloor station. Plus twenty thousand unsold, vacant, unlived-in new units. Oh yeah, and thousands more in pre-sales. So, close to 30,000 condos to buy, and yet only 1,260 buyers last month. And it’s Spring, with 2.74% mortgages. Yikes.

This is a disaster in the making. For Sharon, though, it’s already here. She and Pete have to sell and move to chase a great job in Boston. They’ve one month to find a greater fool, and yet there’s thirty months’ worth of competition.

Yesterday brought all of the confirmation you should need of where this is headed. Real estate sales plunged in Canada’s biggest market, pacing tumbles in Vancouver, Victoria and even the beginning of the end in Cowtown. Equally distressing for the few bulls still left standing, the realtors had to lie about things.

The Toronto Real Estate board announced 7,765 transactions in March, “down 17 per cent compared to 9,385 transactions in March 2012.” But last March there were actually 9,690 sales, according to the same guys one year ago. That’s a drubbing of 19.9%, showing how much fun realtors can have with numbers. (Apparently an astonishing 305 deals, worth more than $19 million, never closed last March. That seems like a story on its own.)

Meanwhile sales in Vancouver crashed another 18%. They were down 15% in Victoria. In the suburban Lower Mainland, off by 20%. Even in Calgary, single-family home sales fell 6%, with realtors citing a lack of listings which is one step up from blaming rutting season. Even the Vancouver board’s famous Frankenumber, which is always supposed to go up, fell by 4%. In Toronto, condo sales sank 18% and single-family home deals were reduced almost 22%.

Let’s recap. It’s Spring. Five-year fixed-rate mortgages are available at 2.74%. You can still buy a house with 5% down. Banks will still shower you with money. Your mom still really wants you to do this. Sharon will crater her asking price for you and throw in her see-through Lululemon pants. So, what gives?

This tired bull is finished. Of course, all real estate is local and Mississauga’s not Burnaby, but the writing is on the wall everywhere. It says, “risk.”

The price crumble now hitting the Mouldy City and the rest of the wet coast, also impacting the Maritimes and most of Quebec, will be a reality everywhere as 2013 plays out. Remember, this is the peak season, the strutting, hormone-fueled moment of supreme prowess for the housing market. With cheap money and warming rays, it doesn’t get any better than this. And still, buyers have faded and the headlines turned nasty. Debt, real estate ennui and granite saturation have taken their toll. If your property was your retirement nestegg, I sure hope you bailed last year, or that your horny kid didn’t buy a condo in 2011 with 5% down.

Finally, why have prices in T.O. not started to rot, as in Van? The average is now up a little over 3% year/year.

Statistically, with an 18% collapse in sales of lower-priced condos, and continued action in the sub-million SFH category, the average and median price can still rise on reduced volume. In fact, that’s pretty much a hallmark of the final stages of a croaking bull – a phenom well-documented before the last epic tumble in the early Nineties. (By the way, it took 14 years for prices to recover. Gulp.)

Beyond that, sellers afraid prices are tanking have simply let their listings run out. The number of detached houses for sale has withered, which has perversely sparked bidding wars among the lusty buyers who remain, especially in traditional 416 demand areas. It’s not uncommon for a semi in Leaside with a mutual drive and an addition made of cornflakes and duct tape, tastefully covered in creamy stucco, to sell for $100,000 over its $900,000 ask. It doesn’t take many of those fin-de-siècle sales to skew the numbers.

Great post tonight, Garth. I really think that comparison of unadjusted current numbers to adjust prior year numbers needs to be exposed in a MSM article. Audited Financial Statements would never get away with comparing prior year numbers under a different calculation method. Why should “Realtors”? I’d love for a Realtor ™ who posts here to explain why this is allowed?

I was in a pub in Vic. last week sitting at the bar. The bartenderess starts talking about how she just bought a condo and can watch the construction take place from behind the bar at work. She’s talking to an older woman a couple stools down who’s being very enthiustiastic for her. I can feel my hair beginning to smolder listening to this vapid lunacy. At some point I chime in that real estate is crashing. The older woman looks at me and tells me “it’s a great time to buy” and points triumphantly at the younger woman behind the bar. I respond with “maybe in five years it will be”. The younger jumps in and says “thats my mom and we don’t want to talk about politics”. I sipped my beer in silence.

In my recent post about the Vancouver property market (see Is the secular bull market in Vancouver RE over?), I speculated out loud that a couple with 200K in annual income and 20% down payment could afford a house in the $1.0-1.2 million range, when Vancouver westside houses that aren't falling apart are trading at $2 million and up. These calculations suggested that the clearing price, in the absence of foreign buyers, would be substantially lower from current levels.

I have since had various discussions with mortgage brokers and realtors that indicated that my $1.0-1.2 million estimate is too low. It was suggested to me that a couple with 200K in annual income and 20% down could afford a $2.0 million home.

At first I couldn't figure out how this could happen. Using a standard mortgage calculator, assuming a 3% mortgage rate for mortgage with a 25 year amortization, I got a monthly payment of $7571, or roughly 91K a year. How could a couple with 200K pre-tax income manage with those kinds of numbers? How would they eat? Even assuming a 2% mortgage rate, I got mortgage payment of 81K a year – still a bit of a stretch for our hypothetical couple with 200K pretax income.

HELOCs to the rescue
After chatting with a couple of realtors, they revealed to me the answer: These people aren't financing their purchases with mortgages. They are financing their entire debt load with Home Equity Lines of Credits (HELOCs), which offer the "flexibility" of being secured, floating rate, interest-only loans!

A realtor’s sign says: “Listings low, demand high”.
Where? Not here.
Listings are double what they were last year and sales are slower. Properties in desirable areas and properly priced sell in days, but your basic cookie cutter dwelling, especially those FSBO, languish on the market.
Go to Timmie’s and you hear the truth. Open houses, reduced prices and still no sale are the new normal. Sad.

There is a slight difference between their numbers for the three categories (detached, semi and townhouses) and my numbers but with 1412 sales counted we are withing the statistic margin for 1% error so my umbers are good enough to show you what is going on behind their average numbers.

PS: Garth please let me know if you want me to stop posting these here. I believe that they are useful and people need to know day by day what is going on on the RE market in To these days.

Vancouver is where you send money to die. Real estate in that city is destined for a climactic death. Values will plummet to nothing very soon as would be equity farmers soon discover that no one in Scamcouver is left to buy except idiots. Vancouver is a joke, and headed for a complete ruining death. Don’t buy anything in Vancouver. It’s headed down the toilet. FIRST!!!!!!!!

Almost a daily real estate bashing by MSM now for almost a year , 20 days on market, sold. Price up 3 precent. tighter mortgage rules………………

The nuber 1 rule in all business,trading, buying and selling, supply demand.

The bubble head looks at what happend down south oh it will happen here..But fail to factor in Supply and demand.

GTA SFH solid….Condos=Screwd…….

All those fence sitters who could have bought in 2009 2010, are now 10 years behind. The looked south rather than evalute supply and demand.

They bet wrong.

Just like I did trading forex yesterday, I did not follow my rules, or my model, I had no dicipline, my mostorus ego took over. Some chump chirped my on here saying my super human skill was luck. Well I sure wanted to show him……

I acted agaist the herd, put a trade between the Bat and the Camel Toe. It went aginst me, so I doubled down. then quadrupled down….The worced thing a trader can ever do…..

Damn at 2 in the morninng while sleeping my 4 bet was liquidated. Huge loss.

Why did this happen, Its one thing to alpha male with an fearfull addiance…and an other do it while trading.

I’m an idiot, new rule, never let ego get in the way of making money………..I did that with YLO two years ago.

Hi Garth, great blog post, most insightful. My wife and I aill mobe to Montreal early May, and are looking to rent a condo somewhere near or in downtown. Do you have, or can you point me to, any statistics on the Montreal downtown condo market? Much appreciated!

Feel bad for Sharon. Though I am glad my ETF R.E.I.T.’s pay me a yield of 5% and have done nothing but go up in value since I bought them. Keep in mind though, I have a couple of personal diversification rules, and I follow Garth’s formula closely as to fixed income/cash- versus other investment assets. I stay close to a 10% limit per asset, and don’t exceed 20% in any one sector, and have a minimum of 5% per investment, and I detest debt, but will use it extremely short term to make a variety of adjustments. Going “all in” in any one asset is never to be an “idolized/adored/revered” behavior, or as a positive action, ever, but to be seen only as an act of insanity. No exception.

I wonder what Brad Lamb would calculate Sharons projected profit on her condo at. Maybe if he logs on to the blog here today he could comment.

Well I sold my house in Nanaimo. As soon as I clean the mould off of the bottom of the windows (and a few other places) I will be clear to look for a rental place. It feels good. It was an OK investment over the last 10 years but it is time to move on.

The stigma against renters is fascinating. It’s been a while since I have been one but I already sense people looking at me like a second class citizen when I tell them I am going to rent. It doesn’t bother me in the least, actually gives me quite a sense of pleasure knowing the freedom and rewards to be realized. There is tons of nice stuff for rent.

Audited Financial Statements would never get away with comparing prior year numbers under a different calculation method.
************************************

Actually it is done all the time.

On occasion they will even have an opening book value of equity that is lower than the closing book equity of the prior year. This is a prior period adjustment posted directly to retained earnings.

Apparently is a nano-second just after mid-night on December 31, but strangely still a mano-second before the new year starts where a big loss can happen which gets charged to opening retained earnings and NEVER appears in the earnings statement of any year.

Another great place to hide these kind of losses is in accumulated other comprehensive earnings. Losses can go here an never show their ugly faces in “net income”. Actually I agree with that accounting but one should just be aware of it.

Also when it comes to non-GAAP numbers it is not unusual to add back a one time loss this year to the adjustment but to “forget” to do that the following year. i.e in Non-GAPP figures 2011 was $90 plus add back an usual loss of 10 = $100. But in 2012 the 2011 non-GAAP number becomes just the $90 forgetting that it was called $100 last year and voila 2012 of say $99 was 10% better than 2011 instead of the more accurate 1% worse. Most companies don’t do this but a few certainly do.

I think that a lot of people fail to see that if the condo market at the low end sees volume fall off substantially while the mid to high priced SFH keep selling, then the “average price” must move higher. That is not based on the prices actually rising, but the higher relative amount of high-priced home sales in the overall average. I believe that we are experiencing this right now in TO. It’s simple math.

What? Realtors lie? I just heard the reason that sales were down in March was because Good Friday was in March this year , last year it was in April. Now I don t know what to believe!

#47Realtors , Bankers , Mortgage brokers and now Canadian government in an all out PANIC! on 04.03.13 at 10:25 pm

“The Toronto Real Estate board announced 7,765 transactions in March, “down 17 per cent compared to 9,385 transactions in March 2012.” But last March there were actually 9,690 sales, according to the same guys one year ago. That’s a drubbing of 19.9%, showing how much fun realtors can have with numbers. (Apparently an astonishing 305 deals, worth more than $19 million, never closed last March. That seems like a story on its own.)”

The majority of realtors are useless shameless criminals who should be locked up in jail for financial crimes against humanity. LIARS LIARS LIARS. No wonder realtors are hated around the world.

#34 – there is very litle information on the Montreal housing market being discussed in blogs. The Montreal condo makrket is in big troubles, so my friends, but I do not know how true that is. Maybe someone else here can provide some uptodate stats, tabernac! – Luc

Garth even though I have agreed that Condo sales and prices will correct – I am still surprised that you are not coming clean with the facts on SFH – especialy as it relates to the GTA.

I have my own persoanl examples of 2 very recent sales in south Etobicoke that went higher than asking – both old bungalows on 40 ft lots and both sold for close to $500k but were asking $450kish. Means shit – same way a few of your examples showing Condos on market longer than normal – but what is normal – I suggest that we should use an average over a 20 year period as a minimum so that means that normal listing periods would be on average 60 to 90 days. Personally I predict that SFH in GTA will hold their levels for reasons that I have shared in prior posts…..but with free mortgage money what is the issue?

The other fact that you are not addressing is supply for SFH. Both in my area and across most of GTA listing for SFH are way down even for this time of year and what is out there is either brand new (in old hoods) or old and in need of knockdown or serious makeover. The development freeze outside the GTA has been creating a supply imbalance for some time.

I do agree that in this environment of high relative prices it is not a good time for RE investing – but for many – owning RE it is NOT an investment – it is a need.

Equity markets both TSE and US ones have done well in the last 3 years and will continue to do so in the next few years – main reason low interest rates – which are here to stay for a few more years – altough markets will continue to be very volatile – reality is that they are not much higher than they were back in 2000 – so the next Bull cycle is upon us or ready to get going.

I will also disagree with you on mutual funds. For someone starting out with a few $ they should be considered as it is a good way to accumulate financial assets. The bottom line is the total returns and not just MERs…there are a number of very good Funds that produce consistent distribution that if reinvetsed can outperform most ETFs – another way of forced savings as cost of purchasing ETFs in small amouts can add up in trading fees.

Anyway – just thought I would remind you/all of us that the reasons for inventing statistics is so that anyone could lie and not be called a liar – or at least use those stats that are more convenient to support their own beliefs or agenda – which BTW I think your is to just stir the shit – be a contrarian – and make people think about life and values.

For the rest of us – life is about staying positive, enjoying it and take risks without which there are no rewards….and if when we retire and run out of savings who cares we can look back and think all day and night about what we did all day and night in our younger days.

I love to share my success and love sharing my fails, thats how one learns, Its ok to lie to people, but never to ones self. I take all the credit for my wins, but blane no one for my mistakes. I evalute them, and try not to repeat.

It’s called a self education proccess. Thats how I learn, not from teachers. They don’t no shit.

#46 PennyDon on 04.03.13 at 10:21 pm
What? Realtors lie? I just heard the reason that sales were down in March was because Good Friday was in March this year , last year it was in April. Now I don t know what to believe!
………………………………..

Your an idiot, everyone one lies, everyone spins, its called business. funny, they don’t teach that at MBA school..what a waste of money.

Smoking Man better days ahead. Forex is for the Super Man, you will need to consult with Yoda about next move. Hint “Take the next few days off of Forex” Put on some of you’re Floyd come back next week.

Would it be possible to avoid a scew in the numbers by comparing total dollar value sales to total dollar values sales of the same month from the year before? This should really display the sh!t hitting the fan.

#4 Scott in Gibsons
What, no bullish comments on the markets or US economy today?

Why? Nothing changed. Other than gold getting clobbered. — Garth

As Garth says buying risk is lowered as prices fall. Gold is a good insurance to inflation, however bullion should be a minor portion of precious metals exposure. I’m heavy precious metals, but bullion is only 5% weighted to my total portfolio.

Once the little boy shout, why is the king wearing no clothes. People began to realized they been con and the word spread and spread.

The little boy is say, OMG, who would pay these ridiculous prices for a cockroach and mice infested dump. People are beginning to realize for a million anywhere else in the world you can get a real nice place and not a fix me upper dump!

[…] They listed their fashionable, almost-new condo in one of Toronto’s hottest hoods ten days ago. Priced forty thousand less than the last sale in the building, and it’s on a higher floor with an extra parking spot. It should have sold in a weekend. But, crickets. Continue reading → […]

What about Kelowna?? Don’t hear you say much about Kelowna specifically these days! The market seems very tight for good homes under 600k. Sold signs everywhere. I know the higher end and condos are struggling. Where do you see things heading?
Thanks

That right, its like Obama’s plan, pay off your debt with no debt or when no one wants to buy your treasuries.

Because Housing has been going up up and up for the past few years, People can continue to extract more and more out using their home equity as a bank machine, usually “RED LINING ” their allowable debt. But what happens when house equity goes down. OOPs, will the banks start making some phone calls and force these guys to pay up?

A group of investigative journalists are ready to release full list of very rich people worldwide who’ve hidden money offshore. in this list is 450 Canadians have stashed money in offshore bank accounts .

They’ve already outed the husband of a Canadian Senator who lied on his tax filings about his stashed millions.

Tonight, many very greedy people are calling their lawyers heading off the scandal, scorn and CRA.

I’d imagine more than a few of them are RE developers who have been dealing with some dirty foreign investors.

Dear people, it’s not worth it to hide money. Not worth the years of headaches, legal bills ahead. Get a good tax lawyer, accountant and a trusty team. Find govt loopholes and all things legal. Just pay your GD taxes.

Smoking Man Stick to your plan!!
Regardless of what “system” a day trader/forex trader uses the BIGGEST reason people get clobbered is when they start trading outside their set of personal rules they follow. If the batman/camel toe is your game plan STICK to it NO MATTER what. That plan is your lifeline in a turbulent sea of sharks. If over time you refine your trading system so be it that is what evolution an adaptation is all about.
Good fortune!

Bitcoin is a bit of a sham. The notion that nobody can switch on the digital printing press in nonsense, since the control of the blockchain is centralized. Decentralization in its purest form, as required to remove any centralized powers, cannot be practically realized, as any cryptographer worth his salt will tell you. At the heart of the problem is key setup and roll-overs when needed – so much for decentralised control. Fools!

I should think that when Canada’s bail in policy is acted on the capacity to pay mortgages will crash and burn as will confidence in governments and banks.
What is happening in Cyprus also happened in England during the 17th century and it was one of the reasons for the Glorious revolution that cost King Charles the 2nd his head. Stealing peoples money tends to make savers just a tad upset with the thieves in question.

site disclosure:
The information presented on this website is purely for entertainment purposes and should not be considered as an investment advice or any kind of advice at all. Statistics presented on this site are not guaranteed to be accurate. Cite at your own risk.

I’ve spent the past years working in one of the northern European cities that has weathered the economic crisis fairly well but has still seen residential real-estate values drop by 20% from peak. Yesterday a friend told me that she has been approved for a mortgage and is looking to buy an apartment. After more than five years of price declines it is less-expensive for her to own than to rent, all costs considered.

I’m just not seeing these sold signs in Calgary some are talking about. I’m not seeing hardly any for sale signs for that matter.
I drove from the Deep South of Calgary all the way to the edge of the NW today. Large brand new cornflake mansions as far as the eye can see in every direction. It’s truly amazing how much has been built in just the last 10-15 years.
I really think when the poop hits the fan Calgary could end up being hit the hardest.
We aren’t so much an oil town anymore, our main industry is home building.

It would be interesting to track the number of realtors in the GTA who do as a job. In theory if realtor can’t put food on the table, he/she exits the job. And this trend would start to predict too many realtors, not enough product changing hands to feed all of them.

“It is estimated that more than $20tn acquired by wealthy individuals could lie in offshore accounts. The UK-controlled BVI has been the most successful among the mushrooming secrecy havens that cater for them.”

Tax havens explained: How the rich hide money – interactive graphic
A great new interactive tool, from CBC Canada, taking you through the theoretical steps you would take to set up an offshore secrecy structure.

The mechanisms of secrecy

This item, which is part of the ICIJ’s mega-investigation of offshore secrecy, will be added to our permanent webpage, The Mechanics of Secrecy.

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Cyprus: Hot Russian money isn’t necessarily going where you think
Posted by: Nick Shaxson in: Thoughts During this discussion with Reuters television the interviewee, my favourite author, displays masterful control of a hacking cough. And some stuff about tax havens too. Original here.

The unbridled arrogance of our “leaders” and others was, amongst other things, good for a laugh. They were going to teach the world a thing or two about fiscal dexterity. They paraded around in G-series meetings like masters of the universe. Too bad. If what many educated, skilled and experienced economists prognosticate comes to pass, Canada will likely garner little sympathy from those it sneered at in the past.

Thanks for your daily posts. I had most of my net worth in my house, which I sold last fall and then invested the money. Even though it was the smart move to make, I still get pangs of house lust and posts like this one help keep that in check.

Hey Garth – What slowdown in condos are you talking about? The dumptrucks were lined up four-deep across from my apartment building this morning when I left for work, carrying away the spoil from the latest condo tower going up on Roehampton Avenue just north of Young & Eligible. Down the street a bunch of boarded-up townhouses are awaiting demolition for yet another condo tower, and the signs are out for that absurd twin-tower development at Y&E. A huge pit awaits filling with the ‘Madison Tower’ a block east from Yonge St. on Eglinton, and I can also see two tower cranes in the area hard a’work building – you guessed it! – more condos. All this I can see during a five-minute walk to the TTC ‘tube’.

Why would banks and developers – supposed cold-blooded, rational types – be building all these glassboxes if the market was tanking? It just does not make sense. Please explain.

It takes about four years to develop and start building a project. The work does not stop in weeks or months, especially once financing has been extended and arranged, and tenders let. Use brain. — Garth

Good post. The revised numbers vs. unrevised is borderline a forgery as per this definition : “making a false instrument, with the intention … to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice”.

#85 “That could be an issue but sfh market doesn’t require a lot of buyers, nothing for sale…….”

TREB reported 8,989 detached active listings at end of March 2013, up 9.5% from 8,207 in March 2012. For 416 only, there were 1,820 active, up 2.9% from 1,769 last year. Press an agent and he’ll admit that when he says there’s nothing for sale, he means there’s nothing ‘quality’ for sale, meaning his buyers are now pickier. As sales are down, there’s fewer of them, too. Tune in next month to hear another excuse… I hope, as I’m getting sick of them blaming the Land Transfer Tax.

Whats the mystery….why the surprise…it’s been obvious for 3 years that the pyramid scheme called real estate was headed for a melt down. Its been laughable to listen to the real estate pimps and their media whores that prices would go up forever…..what did they want…everyone to buy ten?

Pyramid schemes and Ponzi’s are basic math…..no matter what the buy in..or the fantasy compensation promised..there are only so many suckers in the pool…once you run out of bodies…the pyramid collapses…..happens every time.

The next step down is giveaways……and even then you’ll run out of people who can afford the property taxes and the market would collapse…simple math suckers….simple math.

#68 Victoria on 04.03.13 at 11:28 pm
—————————————–
Pay attention. Lower sales allows the higher end homes to skew the average price higher. Therefore, lower sales with higher prices is a leading indicator of future price decreases.

“I read your post, I pointed you to the institution that creates policy for all western central banks – the BIS, it’s their language. You keep repeating your sovereign mantra, that’s a quaint notion.”
———————————————-
“monetary policy is determined by each sovereign nation”

Still haven’t seen a realtor(tm) give a reason why prior year adjusted numbers should be used to benchmark current year unadjusted numbers.

The reason they do it is obvious, it paints a less grim picture of declining sales. How it is ethical to do this however is the question I’d like one of these realtors(tm) to try to explain. Come on guys, man or woman up and give an answer.

For the rest of us – life is about staying positive, enjoying it and take risks without which there are no rewards….and if when we retire and run out of savings who cares we can look back and think all day and night about what we did all day and night in our younger days.

*****

Wow…. run out of savings because of greed and being duped by the real estate industry…. hope your kids do not bear your burden when you run out of money….

No slow down in Van West, and in particular Kerrisdale. I have recently seen 5 properties listed and sold within weeks. I don’t know if they got asking, but the listing prices were so ridiculous, it hardly matters (unless of course they paid more and are selling at a loss). Still see bulldozers on almost every block tearing down properties and new McMansions popping up. There are a few dog listings that have been on the market for prolonged periods, but anything half decent is snapped up. In contrast to that, in Maple Ridge – 40K east of Vancouver – crickets. Listings languishing big time. Several real estate agent colleagues confirm Maple Ridge market is “very slow”.

I am also seeing new sold signs in Calgary still. I would say a majority of for sale signs have sold stickers on them at least near where I am, but there are a few that getting stale. Wonder how long it will last, lol. Also, amazed at the number of former grow-ops clustered in decent communities.

1) Canada issues and controls it own currency.
In theory
2) Canada cannot be forced to default on debts, in it’s own currency.
In theory
3) Canada has the control to make all banks and bank accounts whole, with out burdening taxpayers or tapping deposits.
The BoC could loan money to all levels of gov’t too, why does gov’t borrow from private banks instead?
And most importantly.

4) Why Canada chose to use this volatile language, at all?
Why is Canada militarizing the police?
Why is Canada signining cross border security deals with the U.S. whereby U.S. police and military can operate within Canada and vice-versa?
Just how naive are you? Yes I’m struggling with this. I don’t even pay attention to Canadian news anymore. I just watch what the Yanks and Brits. are up to like a preview for what we’ll be doing. It may be presented with a “Canadian” spin but the basic plot is the same. We’re still a colony that does as it’s told 9/10.
Have a good day.

I am seeing sold signs everywhere shortly after for sale sign goes up in my suburb of Vancouver.

Remember real estate is emotional and the herd thinks it will always go up. The herd does not read stats or this blog. They buy based on what their social circle does , they want to be in the game at the same or better level. They believe what the real estate weekly says or what their realtor says because that is what they want to believe.

Vancouver and area has the mildest climate in Canada and is the most attractive city that offers a multitude of activities.

As I said in the winter , spring will bring a buying frenzy and I am seeing just that it my neck of the woods.

Lying, cheating, sneaking around, being duplicitous is not a killer or hunter or winner attitude. Because if it was you would challenge another hunter and go off with your tail between your legs. You prey on weak, or trusting and yes, there are those who kill and eat first and those who eat last, but you don’t eat the weak.

Trust me turdboys, I destroy it 7 days a week in a very bureacratic institution and I’ve never taken the smile off of anyone’s face and a lot of people have been made, paid and laid off of Torontorocks benevolence.

Yes, 90% of people now are weak and cowardly – I won’t steal from them, just push them out of the way and show them how its done.

# 102 Gotthardbahb – now you all should know why the building continues as told by Garth. These people have too much in the game to pull out now. The market is still tanking even though some of you try to deny it.

Garth is proven right about the Canadian Real Estate bubble… it’s crumbling one marble slab at a time.

As is his Canadian bank fantasy… as the world begins to wake up to the fact that the world banking cabal have developing crisis resolution plans… G20 agreement link (http://www.financialstabilityboard.org/publications/r_111104cc.pdf) for systemically important financial institutions (SIFIs) which includes opaque reference (creditors, liabilities, etc) to confiscation of customer funds (in English, that incudes savings, RSPs, trading accounts and any other form of deposit of personal wealth in a bank that is not guaranteed… and clearly Cyprus has put them on the table as well) and is now officail policy of the Harper Government.

The drum beat continues, as more “informed” citizens (and “experts) begin to understand the banking/financial system is broken. But Garth says “nothing to see here, lets move on,” don’t worry, be happy and buy a bank!

Please understand… each dollar you give to a bank in any form IS A LOAN… you are a CREDITOR, and your money is at risk. The power hungry banking cabal has slowly forced every monetary transaction in the developed world to flow through their web of fraud and corruption… can any of you get paid for the work you do without the funds first BEING LOANED to the bank before you are given the privilege of access to your own money… just stop and think about that for a minute!

Bitcoin, the only (non manipulated) alternative to the banking cabal system, has appreciated 300% since Cyprus… and once the cabal loses its (fraudulent paper) grip on precious metals they will join Bitcoin as the rational alternative to the fraud and corruption that is our banking system!

More to come… watch the news!

Fools and their money are soon parted, and bankers have nothing to do with it. — Garth

I met a truthful real estate agent in Valencia Spain last week. I had been looking at flats in the fine old area of Ensanche just outside the city center. He said I should wait because prices were still falling. He said by Christmas there should be some resolution. Either things would get a little better or Spain would explode.

Garth- you asked “where in the markets stats is this “buying frenzy” ?

It will show in April figures
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That’s funny, Q4 2012 I was posting on different RE blogs that Q1 2013 will show a continued downward trend in sales, wait and see what the spring market brings. They key word is continued, what are you basing your comment on? I suspect you walked up a certain street that may be aligned with your “theory” and you have expanded your “theory” to a larger geographical area without any actualy data.

The problem is though if you’re trying to sell a house you sell it in the future not n the past. The truth is inventory as usual in Edmonton is going sky high month over month this year which means falling prices year after year decade after decade and century after century.

“lawyers argue Stockton has no viable way out of insolvency unless it addresses its pension debts. The city’s tentative plan would still have it racking up $100 million in operating deficits over the next 10 years and the CalPERS obligation would actually increase, said.”

“More and more upper-income Canadians are hiding their money overseas, not contributing to the Canadian economy and not paying their fair share, and that simply means the rest of us have to pay more,” he said in an interview. “It’s grossly unfair.”

The impact of the crisis in Cyprus is almost like a butterfly effect. It is so tiny that one cannot imagine it having a global impact. Yet, its crisis has dented global markets to the tune of trillions of dollars, hundreds of times the direct cost of the crisis. This demonstrates the inherent instability of the global financial system. A small change in perception can lead to big price moves on financial markets.
The troika solution to the Cyprus problem breaks two taboos regarding financial bailouts of the past five years. It wipes clean the rescued banks’ senior creditors and gives large depositors a serious haircut. If creditors and depositors adjust their risk assessment, weak banks around the world could go under, taking down the global economy. Even if the chance of this is small, the consequent price adjustment in the global financial markets is significant.
The global financial system is holding major central banks and governments hostage. The Cyrus bailout addresses one serious flaw in today’s financial system – the under pricing of risk due to implicit government guarantees. When a weak bank offers high interest rates to attract creditors and depositors, that latter are enticed because they assume government bailouts will prevent them from suffering losses. Hence, weak banks can survive by raising interest rates. They are incentivized to gamble in a high-risk investment. If they are lucky, they survive. If not, they fail, as they would anyway. Such a vicious cycle deepens the cost of a final bailout. Hence, the Cyrus solution puts creditors and depositors on notice. It should be a very healthy development.
The impact of the financial crisis in tiny Cyprus reminds us that governments and central banks are beholden to the global financial system. When they try to remove a flaw in the system, the resulting market reaction can bring down the whole house. Imagine that Italians were withdrawing all their deposits, would the European Central Bank be forced into guaranteeing all deposits? The expectation for that is preventing people from taking their money out. Hence, the bailout expectation is the key to stability.
The global financial system is so flawed that its stability depends on implicit government guarantees. Unfortunately, such guarantees ensure that such weaknesses persist. The vicious cycle keeps the global financial system permanently unstable.
More…

“I don’t even pay attention to Canadian news anymore. I just watch what the Yanks and Brits.”
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You actually watch MSM, anywhere? Your, calling me naive.

You want to discuss how deep the rabbit hole goes?

There are two versions of reality. The second is seldom discussed, here or in public.

1) The official sanitized ‘system': You must to vote to change things. Our ancestors died for our freedoms. Our military performs only peacekeeping missions. One must appear successful whether or not, one is successful. Our government has altruistic intentions. The Olympics are for athletic competition. Canada is free to decide its own future.

One shouldn’t ask, uncomfortable questions.

2) The unpleasant reality: Countries are tax farms. Citizens are Chattel. Democracy is an illusion to pacify. Borders crate false, us vs. them patriotism. Wars are a for profit business. 75% of our national debt is interest. We are being assimilated by the US. Private banks, control world finance.

About skewed stats , all real eastate stats are skewed , they are only taking a sample of sales like a poll, comparing SFH and condos prices together is also terrible comparison math. To use an example of ONE condo selling experience to explain how a market is down is JUST as inaccurate as the real estate monthly numbers . To people renting , its great that you can save compared to owning , but Ive never met a renter that can save the difference (gets spent on nothing usually). Buying a house should never be about averages , should be about fundamentals and that can change drastically from two houses on the same street , USE your brain and heart and gut, to find something thats work for you, and get off your butt, I respect Garth but his opinion is just one of millions and he has been wrong about real estate values for a long time , real estate runs in cycles , requiring adjustments , a ten % adjustment does not mean a crash and prices have not even started to adjust , and comparing this Mar and Feb , to last years RECORD numbers and balmy weather shopping is just foolish

I love to share my success and love sharing my fails, thats how one learns, Its ok to lie to people, but never to ones self. I take all the credit for my wins, but blane no one for my mistakes. I evalute them, and try not to repeat.”

Looks like PANIC is setting in the RE market as people flood the market looking for any greaterfool before it all goes up in smoke. Driving through the GTA and i noticed many more for sale signs and some for sale sign on houses that sold three months ago? How is that possible? in any case reeading the G@M and the has F gone to far tells me the RE shills are in a PANIC as they know the real sales numbers and they are WORSE then they reported.

#154 Peter on 04.04.13 at 3:21 pm
You do bring up an interesting point about numbers. I would challenge your last statement (at least from a GTA perspective) that last year had RECORD numbers. You’ll never have a measuring stick for housing, all you can do is take into account all the valid variables and try to make your own deduction. The question is what’s valid and what’s not? Does the fact that we had 27 days in Feb really skew the numbers? Does the fact that Easter was in March provide an excuse for negative YoY sales in 2013? They do not.

Invest in the US? A slippery slope economy built on printing press money. Our banks so solid that your friendly friends in Government enacted similar stuff 2 years ago and put it in this year’s in the budget that the Cypriots now have to swallow. Their Govt stealing 80% of their accounts. The lead instigator of this “crap” is none other than fleeing to Britain Mark Carney.

Real estate a buy in the US? Why bother the 2nd downturn is in the making. The Royal LePage guy on BNN today is all rosy about Vancouver and Toronto markets. Recovery imminent he says.

Let’s get it straight. Gold/silver bullion and coins are bought in greater numbers everywhere in this world of insanity. Don’t keep a lot of money in the banks. They’re not playing Robin Hood.

“It must suck to be you. — Garth”
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I think you misunderstand my perspective, Garth. I’m not complaining. Just stating facts. Uncommon insight provides invaluable information. I see opportunity every were, kind of a like a wolf, amongst sheep.
I hold no illusions. Worship no deities. It’s very liberating. Family is happy. Business is good. Life is great!!

#142 Victor – He needs to go further yet in slowing things down. Only the real estate industry is complaining about the changes that have hastened the decline…. only concerned about their own interests.

You mean to tell me some people are actually surprised by what’s happening in the Toronto condo market? Periodically I visit Toronto and, each time I visited the city I saw more new condo buildings going up. It really hit me in March of last year when I saw more of these buildings crowded around in the area around Union Station and Steamwhistle Brewing Company. It looked like you couldn’t swing a broom around without hitting one. Right then I was whisked off to another nostalgia trip to 1989, complete with the Exxon Valdez oil spill and talk about low temperature nuclear fusion. Why? because that was the last time condo building and prices went from absurd to crazy. It was like a slow burning campfire that suddenly erupted into a raging, run for your life inferno. So now I wonder, how could anyone after seeing what I saw, NOT see that it was an overbuilding bubble?

Smoking Man did you heed my words about Forex? Dow up, TSX up, Can $ up, what say ye oh Lord of thy Smoke?
I always say after I get my A$$ kicked in the market, WTF were you thinking? There my lies the fundamental flaw in all of us gamblers, just don’t think! Just do it!

I put up a galiant battle, balls in huge.. Made my loot back today.. Got margin called in middle of night, roobo sold a 4 contract, down, 2.6 k when I wake up.. I love winning more than I hate lossing.

“The message is worse. — Garth”
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I know. I Normally avoid open discussion of the nasty issues raised today as this blog’s skin is too thin for this type of, harsh reality. When one critiques the ‘system’ one expects push back from those whom benefit from it, status quo.

I advise most, stick to the blue pill. Not all truths are beneficial. Some carry heavy burdens lesser men struggle to shoulder without negative consequences.

CHEK news on the markets today and why the Dow was up and TSX down again. As reported its because our interest rates are stiffeling our housing market vs the US housing market being in recovery…Oh and because it is tied to other things like oil, mining… No mention that the US market has experienced a significant correction or that we are at that stage now.
Pump pump while the prices dump.

Let’s see that with an income graph superimposed. What bubble? — Garth

In due time. I have data for average weekly wages back to 1941 in Canada. The increase in house prices compared to wages may even shock you Garth, especially in the last 25 years.

Food for thought, I am working on a graph with average house prices and GDS ratios over time. Imagine what mortgage brokers would do if the GDS ratio dropped back to 23% and you could only use half of your spouses income?

1946- GDS ratio is 23 %

1960’s- GDS ratio increased to 27%

1972- all of spouses income can now be used in GDS ratio, before 1972, only half was used

Early 80’s- GDS ratio increased to 32%, TDS set at 40%

2007- Some lenders scrap GDS ratio altogether, bumping their acceptable TDS ratios up to 44%. On an exception basis, clients are sometimes approved with TDS ratios of 46% or more.

Between 2008-2010 CMHC applies more stringent maximums for riskier borrowers (35% GDS and 42% for credit scores below 680) No GDS requirements for low risk borrowers, TDS at set 45%

Gold and silver is, no doubt,a good hedge, purchased at the proper time. But, go easy buying both gold and silver, or else the hedge/insurance effect you want disappears with the increased risk you are trying to avoid. Remember, balance, re-balance, diversity, and liquidity. I say this because no one knows with certainty what is going to happen, and every industry is flogging what they are selling. Garth teaches wise principles of investing, and he is right. Little variations from what Garth teaches won’t kill you financially, but big variations, with a high probability, will be lethal. 100% vested in 1 asset(asset class), is exactly like playing “Financial Russian Roulette”. No exception.

Um, Garth… what was that you said about uninsured deposits not being at risk in our banks?

What say you about this joint statement from the Fed and the BoE? Granted, they aren’t the BoC, but given the mealy-mouthed wording in the latest Dwarf budget, I’m not so sure the Western banks aren’t lining up the steer for the slaughter anymore…

“The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability.

They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers. These strategies should be sufficiently robust to manage the challenges of cross-border implementation and to the operational challenges of execution…

But insofar as a bail-in provides for continuity in operations and preserves value, losses to a deposit guarantee scheme in a bail-in should be much lower than in liquidation. Insured depositors themselves would remain unaffected.

Uninsured deposits would be treated in line with other similarly ranked liabilities in the resolution process, with the expectation that they might be written down.”

So in the New Speak credibility means chasing a buck however phony or counter intuitive that yeild is.
Mr Sprotts funds are oriented to real assets with a buy and hold strategy that embraces reality.
You can Cramdown all the flavour of the month Benny Bucks you want but at the end of the day you are holding empty promises.
Credibily is having the courage of your convictions and acting on them, not bootlicking the story line of a failed politician.

Sprott has lost investors considerable coin, and is now spreading disinformation. If it is to attract more investors, I understand that. If he believes it, he’s a quack. If you post here again, try not to be insulting. It diminishes you. — Garth

Calgary Oil & Gas projects are still being cancelled at an ever alarming rate.

Water cooler talk tonight with the senior I&C Engineer, enlightened me that only one of the major Engineering firms, has new work ( Jacobs) – rates paid to the Contractors will be falling as the race to the bottom begins

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.